BRAC Dairy & Food Project
BRAC’s microfinance programme used to enable farmers to buy land and cows in order to produce milk. While BRAC helped these farmers to generate income through micro financing, dairy farmers still did not have consistent access to the market. The demand of milk in a single village was not enough to generate a hefty profit. A lot of milk lay to waste because dairy farmers did not have enough demand to sell their milk and no proper refrigeration to store the unsold milk. Sir Fazle Hasan Abed, founder of BRAC, noticed this problem and proposed establishing a milk factory to collect milk from local farmers for a fair price. As a result, BRAC initiated BRAC Dairy & Food Project (BDFP) in 1998 to serve as a market for dairy farmers throughout rural Bangladesh.
BDFP’s original mission was to grant farmers market access, ultimately helping them generate income. Over time, BDFP’s goals have expanded to serve high quality milk product to their customers. With inconsistent electricity and therefore refrigeration, dairy products generally are not widely available in Bangladesh. 85 percent of Bangladesh still relies on the ‘informal’ milk market which delivers bulk amounts of raw milk to consumers. BDFP caters to the 15 percent of Bangladeshis who rely on the formal milk market which sells processed and packaged milk. In essence, BDFP channels milk from rural areas into urban areas while channelling urban money into rural areas.
There are a few steps in BDFP’s operation. Currently, BRAC Dairy has one processing factory in Gazipur, Bangladesh, but it has 101 chilling stations in the western half of Bangladesh. As of now, BRAC Dairy collects milk from mainly western divisions of Bangladesh: Khulna, Dhaka, Rajshahi, and Rangpur. However, BDFP mostly sells its products in the eastern divisions of Bangladesh: Chittagong, Dhaka and Sylhet.
First in the supply chain, independent dealers purchase milk from dairy farmers for a fair price. These dealers travel to one of BDFP’s 101 chilling stations to sell and preserve their milk. BDFP purchases the milk from dealers for a higher price than other dairy retailers, allowing the dealers to continue giving farmers a fair price for their milk. Finally, it processes the milk at its factory in Gazipur, where it produces numerous dairy products, e.g. pasteurized liquid milk, UHT liquid milk, low fat liquid milk, chocolate milk, mango milk, full cream milk powder, low fat milk powder, sour and sweet curd, ghee, butter etc. These activities increase the market stability for dairy farmers and provide high quality products to consumers in urban areas. A more stable market allows BDFP to continue buying milk from dairy farmers for a fair price.
In 2012, BDFP has launched with a new brand named 'Aarong Dairy' for its all dairy based products. BDFP distributes its milk based product via an internal and external distribution chain. For the external sales, dealers (100 plus) purchase Aarong dairy products and sell them to various retailers. BDFP also has its own sale centres in 35 places, forming an internal retail chain.
When BDFP first started, it produced 140,000 litres of milk per day. As of now, it has the processing capacity of 170,000 litres of milk per day engaging 1500 employees. Today, BDFP holds 22 percent of the national market share. It is also one of the largest BRAC enterprises, making profits of over BDT 220 million.
Synergies with other BRAC enterprises
One of BDFP’s goals is to provide a very high quality product. To enhance the quality of milk, BRAC started its artificial insemination enterprise. This enterprise helps to conceive the highest quality dairy cows. Artificial insemination adds value to BDFP’s final product, which allows BDFP to maintain a good price for its products and create greater surplus. Over time, BDFP has expanded to provide training to farmers on how to rear healthy dairy cows, providing vaccinations, nutritious feed, and other technical training. Very recently, BRAC Salt launched a new product called Minamix for cows. This product enhances the health of cows, contributing to higher quality milk production.
BDFP has three main groups of clients: dairy farmers, consumers, employees and institution providers. Currently this enterprise serves roughly 40,000 farmers in western part of Bangladesh. Consumers of Aarong dairy products benefit from high quality, hygienic dairy products which BDFP produces.
BDFP’s 1500 workers benefit from employment from the enterprise. Most of BDFP’s employees are skilled workers. Highly skilled veterinarians monitor the health of dairy farmers’ cows. BDFP also trains its workers on hygiene testing and quality control measures. They also employ workers to procure milk from chilling stations, factory engineers, marketers, and day labourers.
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